Is Herbert Kohler's Union Deal a Possible Blueprint for Wisconsin?

Last November I wrote a story about Herbert Kohler, Jr., the chairman and chief executive of the $4.7 billion (revenues) private plumbing company in Wisconsin that bears his name. The story focused on how the 72 year-old had grown his family business into a global powerhouse, and how his own love of golf had turned him into one of the game’s leading men, with his Whistling Straits courses, property in St. Andrews, Scotland, and more golf-related ventures on their way.

But a smaller part of the story has come into sharper relief, thanks to Wisconsin’s ongoing union strife.

During my reporting of the story, Kohler was in intense negotiations with the 4,000 union employees at the company’s flagship plant in the pretty Wisconsin town named after his family. Kohler has gradually transformed the town from an industrial site to a resort town, with high-end American Club Resort Hotel, and the nearby golf courses at Whistling Straits and Blackwolf Run. But a large part of the town’s charm lies in the fact that a portion of the company’s manufacturing still takes place right there. Tours of the plants—in which visitors can see the making of the toilets and baths that have anchored the company—are a must-do for all visitors.

But when Kohler spoke of the negotiations with the unions, he said, bluntly, that he was “worried about it.” The Kohler plant with its 4,000 employees is the company’s most expensive by far. (Employees made an average hourly rate of $22.54, one of the highest union wages in the country; most of Kohler’s 30,000 employees work overseas.) Kohler told me that he desperately wanted the plant “to become viable.”

Perhaps adding to his anxiety was the fact that the Kohler company is no stranger to union troubles. From 1954-1960, the company endured the longest industrial labor strike in American history. Herb Kohler himself was attacked by a handful of teenagers during that strike and escaped only when he struck one of his assailants with the butt of a pistol.

But in the end, Kohler and his union employees worked out a deal. On December 19th, after five months of bargaining, United Auto Workers Local 833 accepted a contract offered by Kohler. The five-year deal included some serious concessions from the union, including a wage-freeze and higher healthcare premiums for all members. UAW Local 833 voted to accept the deal, 62% to 38%, despite the fact that UAW leaders did not approve of it.

And now, just a few months later, unions and Wisconsin are back in the news. Governor Scott Walker has proposed, among other things, that public sector union members increase healthcare and retirement payments (they currently pay below the national average in both categories). He’s also proposed doing away with a union’s right to collective bargaining. And all hell has broken loose.

UAW Local 833 is, of course, not a public sector union. But its members have flocked to Madison to join in the protests, using their vacation days to do so. “We’re going there in an act of solidarity,” UAW Local 833 president, Dave Bergene, told me. “If Walker can get away with this with them [public sector unions], we’re next.”

Bergene pointed out that his chapter’s protests do not mean that they are breaking their deal with Kohler. “We did that deal with collective bargaining,” he said. And that’s a right he and other union members would like to keep. He added: “We don’t mind negotiating healthcare premiums.”

Private sector unions and public sector unions are certainly different beasts, but one can’t help but wonder: would a Kohler-like deal be a smart compromise for both sides in the Walker-public union debate? Should public sector union members give in a bit and pay more into their healthcare and retirement plans? And, in return, should Governor Walker not abolish the union’s right to collective bargaining?